Conservatives suggest spending cuts, non-profit tax

AUGUSTA – Conservative lawmakers on Wednesday delivered a set of recommendations to the Legislature’s Appropriations Committee as it enters the final weeks of negotiations over the next biennial budget.The combination of spending reductions and new revenues adds an interesting twist to discussions underway in the Appropriations Committee, where sources say the general consensus is that a sales tax increase is inevitable.

Senate Minority Leader Michael Thibodeau (R-Winterport), Sen. Andre Cushing (R-Hampden), Sen. David Burns (R-Whiting), Sen. Doug Thomas (R-Ripley) and a vocal minority of House Republicans suggested options for reducing spending and raising revenues.

The purpose of the event, according to the lawmakers who crafted the cuts, was to point up ways to balance the State’s budget without raising sales and incomes taxes or suspending revenue sharing to Maine’s municipalities.

All told, the conservatives’ proposal would reduce state spending by more than $135 million, while raising $232 million in revenue through assessments levied against Maine’s wealthiest non-profit corporations.

The proposed spending reductions include $30 million from wind power subsidies, $28 million from Efficiency Maine, $28 million from the Office of Information Technology, $19 million from the UMaine System’s administrative budget, and more.

“It’s easier to raise taxes than it is to reduce spending,” said Rep. Heather Sirocki (R-Scarborough), one of the conservatives who helped find potential savings.

“Gov. LePage presented a bold and balanced budget,” she said. “Over the years, Maine had gotten into a bad habit of routinely spending beyond our means.”

“It is time to be realistic,” she said. “Outside special interest groups have been loudly proclaiming that if only the rich paid their fair share all would be fine – really? According to the Maine Revenue Service estimates, there are only 4,100 people earning $250,000 a year or more in the whole state.”

She said more taxes on such a small minority of Mainers would not raise enough revenue and would only exacerbate Maine’s economic problem.

Rep. Lockman said the proposal was designed to inspire members of the Appropriations Committee to get creative about balancing the budget.

“I cannot go back to my constituents – the people who elected me – and tell them that I came to Augusta and the only place I could find to cut was revenue sharing with municipalities,” said Lockman. “Likewise I cannot go back to them and tell them that the only way to balance the budget was to raise taxes on the Maine people,” he said.

He said the conservative proposal would fund revenue sharing and homestead tax exemptions by asking a broad array of non-profit corporations to make payments in lieu of taxes to the State as an emergency measure.

“We believe it is time for Maine’s very profitable non-profit sector to start paying their fair share of the cost of government,” said Lockman.

The proposal includes an estimated $150 million in new revenue garnered from a “recycling fee” on non-profit organizations with assets greater than $250,000 effective in 2015.

“We call it a recycling fee because many of these organizations are simply recycling tax dollars that come out of this building,” he said.

The idea to levy assessments against non-profits will most certainly be considered a tax increase (at least in Grover Norquist’s book). It was tossed around Gov. LePage’s office in January, recently picked up by Sen. Patrick Flood (R-Winthrop), and, according to State House sources, has not been ruled out by the members of the Appropriations Committee.

S.E. Robinson
Maine Wire Reporter
serobinson@themainewire.com